The NBA is expected to borrow $200 million to help 15 franchises that are struggling through the current economic recession.
The funds will be distributed evenly, with each of the 15 teams getting no more than $13.33 million.
Hopefully, this loan will come with a stipulation that teams can no longer give enormous contracts to busts, stiffs, and malcontents.
The NBA was not searching for a stimulus package. Instead, JP Morgan and Bank of America contacted the league and offered to loan them some money. Meanwhile, most NBA fans can’t even get a loan to buy a pack of gum.
The 15 teams have not been identified, but it’s easy, judging from empty seats and salary dumps, to determine the struggling teams.
Franchises with incredibly wealthy owners, like the Portland Trailblazers and the Dallas Mavericks, are fine. So are teams from large media markets like New York, Los Angeles, Chicago, and Boston.
However, teams that recently moved, teams in small media markets, and teams run by Steve Kerr are in serious trouble.
As for ramifications, this loan could eventually lead to a lowering in the league’s salary cap from $59 million to $57 million. That’s good news for teams well below the salary cap but bad news for franchises already paying luxury taxes.
It could also mean the elimination of lucrative contracts for coveted free agents. Instead of entering free agency, some players may choose the sure thing and sign contract extensions with their current teams.
Looking further into the future, this loan could be the first sign of a work stoppage. The current collective bargaining agreement ends in 2011 and, according to those in the know, owners are willing to endure a shut-down in order to lower the salary cap and retain more revenue.
As an indication of our dire financial times, when I started writing this article the NBA was only borrowing $175 million. By the time I was finished, the NBA announced they were borrowing an additional $25 million.